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March 2020 Jobs Day Preview: The Jobs Report Will Miss Significant Economic Damage

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Data on the labor market shows significant turmoil for the US economy, but the March jobs report won’t fully capture the damage done so far.

Some might be expecting eye-popping numbers from Friday’s job numbers, but that won’t be the case. The March jobs report won’t reflect the severe economic damage that happened in the second half of the month. The surveys used to construct the report were asked earlier in the month, during the workweek of March 9 through March 13. Millions of workers have lost jobs since then and the trend in job postings on Indeed has slowed considerably, from down 2.2% on March 13 to down 15.2% on March 27.

The weekly unemployment insurance claims numbers give us a sense of how many workers have lost their jobs during a week, though it doesn’t totally capture all layoffs. During the week ending March 14, when the jobs report data were captured, there were 282,000 initial claims. The next week, ending March 21, saw about 3.3 million people claim unemployment for the first time. That shock is equivalent to three years of improvement in the employment rate disappearing in one week. It won’t be reflected in Friday’s numbers.

A slowdown in hiring

While the number of workers losing their jobs is more readily apparent, what has historically driven employment growth down and unemployment rates up is a slowdown in hiring. The outlook for hiring is not bright, according to data on job postings from Indeed. The trend in job postings is down 15.2% compared to a year earlier, as of March 27. The slowdown has picked up since the BLS collected data as the trend was down 2.2% as of March 13, the week the jobs report was being measured. The report is going to miss that deterioration in planned hiring. 

The numbers in Friday’s report might give a false sense of relief about the state of the labor market. But given the higher-frequency data available, it’s clear more significant damage will show up in future reports. The March numbers will be a reading of the foreshocks that preceded the major quake.

In the report, I’ll be looking to see:

  • How much the unemployment rate rises despite the reference week for this report missing the week that saw severe layoffs
  • How much the rate of involuntary part-time work rises, especially in the leisure and hospitality sector
  • Whether labor force participation declines as jobless workers hold off on job seeking during a period of social distancing